Saturday, December 15, 2012

Abstract:
I find that median wealth plummeted over the years 2007 to 2010, and by 2010
was at its lowest level since 1969. The inequality of net worth, after
almost two decades of little movement, was up sharply from 2007 to 2010.
Relative indebtedness continued to expand from 2007 to 2010, particularly
for the middle class, though the proximate causes were declining net worth
and income rather than an increase in absolute indebtedness. In fact, the
average debt of the middle class actually fell in real terms by 25 percent.
The sharp fall in median wealth and the rise in inequality in the late 2000s
are traceable to the high leverage of middle class families in 2007 and the
high share of homes in their portfolio. The racial and ethnic disparity in
wealth holdings, after remaining more or less stable from 1983 to 2007,
widened considerably between 2007 and 2010. Hispanics, in particular, got
hammered by the Great Re cession in terms of net worth and net equity in
their homes. Households under age 45 also got pummeled by the Great
Recession, as their relative and absolute wealth declined sharply from 2007
to 2010.
This raises, as always in my mind, the question of policy: is the problem the boom, or the bust. After all, there's a boom and bust cycle, and good reason to fear it. But should we blame low interests, or the animal spirits?

Suppose I have a house, and you have a house. Each is worth $100,000. Then I value your house at $1,000,000, and loan you $500,000 based on that collateral. You do the same for me.

Now each of us has a house "worth" $1,000,000, plus $500,000 in cash to go buy stuff with. But neither of us can pay back the loan, and we both go bankrupt. The houses, however, are still worth the same old $100,000 each will actually command in a stable market.

If you measure from the peak of the bubble, we lost a lot of wealth. But that wealth was entirely fake, created by a revved up demand for houses as assets expected to appreciate rapidly. (The rule in financial pricing: "anything we all know will happen tomorrow actually happened yesterday").

So...an existential, ontological, and epistemological question: was there a wealth loss? Or did the wealth never "really" exist in the first place? And how would we know?

Abstract:
Online social networks are used by hundreds of millions of people every
day, but little is known about their effect on behavior. In ﬁve
experiments, the authors demonstrate that social network use enhances
self-esteem in users who are focused on close friends (i.e., strong
ties) while browsing their social network. This momentary increase in
self-esteem reduces self-control, leading those focused on strong ties
to display less self-control after browsing a social network.
Additionally, the authors present evidence suggesting that greater
social network use is associated with a higher body mass index and
higher levels of credit card debt for individuals with strong ties to
their social network. This research extends previous ﬁndings by
demonstrating that social networks primarily enhance self-esteem for
those focused on strong ties during social network use. Additionally,
this research has implications for policy makers because self-control is
an important mechanism for maintaining social order and well-being.

Abstract:
In the two studies reported here, we examined the relation among
residential mobility, economic conditions, and optimal social-networking
strategy. In Study 1, a computer simulation showed that regardless of
economic conditions, having a broad social network with weak friendship
ties is advantageous when friends are likely to move away. By contrast,
having a small social network with deep friendship ties is advantageous
when the economy is unstable but friends are not likely to move away. In
Study 2, we examined the validity of the computer simulation using a
sample of American adults. Results were consistent with the simulation:
American adults living in a zip code where people are residentially
stable but economically challenged were happier if they had a narrow but
deep social network, whereas in other socioeconomic conditions, people
were generally happier if they had a broad but shallow networking
strategy. Together, our studies demonstrate that the optimal
social-networking strategy varies as a function of socioeconomic
conditions.

Friday, December 14, 2012

He makes two points. One is that we are NOT having a debt crisis. And he's clearly right,in an unimportant way. It's important to keep track of a distinction. If I open a line of credit with a banker, then I get (say) $250k of "credit." Then, I borrow $50k. Compare me to someone else who has only borrowed $20k. Who has more of a debt crisis? It depends on the remaining credit of the other guy. If he has a credit line of $20k, and he has borrowed ALL of it, then he has a debt crisis. I have borrowed far more, $50k, but my credit is still fine, because lenders believe that I have a capacity to repay even more.

The amount of CREDIT the US has with the world is much, much bigger than the amount we have borrowed. So, no one is seriously worried about us repaying. Because a company that is bankrupt has no way of getting more revenues. But the US could easily collect enough revenues to service its debt, just by raising taxes by 20%. I think PK is underestimating the temporary effects of the Eurozone crisis, and our borrowing costs are artificially low because people just want to hold dollars and get out of Euros. So the reason people are buying T-bonds is NOT because they are US debt, but rather because they are US dollars. Still and all, sure, he's right about that. I worry that we are going to raise taxes in the future to pay for stupid spending now, but there is no "Crisis".

So, it is useful to know HABBAL.* And B. Nyhan is right to admonish people who blame Obama for not being able to control or direct the nut jobs who make up the U.S. Senate.

But I think it is just fine to blame Obama for stepping up DEA and Justice Department enforcement against state-legal pharmacies and growers. For expanding the scope and impact of executive orders and extra-constitutional decrees. For expanding the use of drone strikes, without due process, and for imprisoning and mistreating citizens, of the world and of the US, without evidence or chance for a hearing. For being a coward on immigration policies that are entirely in the control of the executive branch.

In short, you apologists have your heads up your Birkenstocks. Obama is quite a bad president. When you defend him, you are basically saying that Mussolini was better than Hitler. Okay, yes, that's true, Obama is better than Bush was or McCain would have been. But stop making excuses. Obama is quite a disappointment, if you are anything but an unreasoning Democratic hack.

*How A Bill Becomes A Law. If you don't know HABBAL, you'll be needing some more Schoolhouse Rock!

Notice that there is nothing there about executive orders and systematic violation of the 1st, 4th, and 5th Amendment. And THAT is why Obama is a bad President: he ignores the Constitution. Not because the Senate is even worse.

Thursday, December 13, 2012

Myself, I think the whole "Fiscal Cliff" thing is overblown. After Simpson-Bowles specified a set of tax increases and spending cuts, as a STARTING POINT, rather larger than that that would be imposed if we go off the "cliff." (The intelligent and attractive DW has been saying this for a while, to be fair). And I am for the most part a fan of Simpson-Bowles, if no one will take the KPC proposal of actually cutting military spending and entitlement spending F'REAL.

But, for those of you interested in the "Cliff" notes for their own sake, here is an interesting analysis by John Cochrane.* It's not simple, but it is interesting. There are parts I disagree with, but he raises some terrific points you won't hear in the MSM.

Driving in Russia. The premise is that "everybody" has a video camera to record accidents that are not their fault, because other people lie and police are corrupt. I'm not so sure. The point is that these are people who have video cameras on their dashboards, so whatever that implies about selection, is implied. Caveat inspectoris!

Monday, December 10, 2012

Abstract: Regulation is very persistent, even when inefficient. We propose an explanation for regulatory persistence based on regulatory fog, the phenomenon by which regulation obscures information regarding the value of counterfactual policies. We construct a dynamic model of regulation in which the underlying need for regulation varies stochastically, and regulation undermines the social planner's ability to observe the state of the world. Compared to a full-information benchmark, regulation is highly persistent, often lasting indefinitely. Regulatory fog is robust to a broad range of partially informative policies and can be quite detrimental to social welfare. Regulatory experiments, modeled as costly and imperfect signals of the underlying state, do not eliminate the effects of regulatory fog. We characterize their effects and provide a framework for choosing amongst a set of potential regulatory experiments.

1. Building skyscrapers in less than three weeks. Very cool. Because it's so simple and interesting. And the head guy is such a nut job. If you are going to be an arrogant ass, it's way better to be an innovator rather than just pure arrogance without accomplishment. Donald Trump, you got nothing, 'cause this guy actually BUILDS stuff, and he makes them memorize how to brush their teeth HIS WAY. Donald, you're fired!

2. I'd heard about this. But actually listening to the 911 call makes it funnier. "I'm out in the country somewhere..." Clearly a well-planned burglary: he doesn't even know what STREET he's on. Home break-ins with someone home are almost unknown in the parts of the U.S. that allow guns. A shotgun at close range is extremely uncomfortable. Enough so that the burglar was the one who called 911....heh. Audio: "Hurry up, now! My husband's fixin' to shoot him." Not so funny: I'm not sure what I would have done. Guy was in the house. You don't have to give warning, and you don't have to allow him to retreat. This homeowner didn't panic, though, and he did the right thing. No reason to shoot. I'm just saying I might not have been that brave. Just being in the house is enough for me to infer "bad intentions." If I had had a shotgun, I would certainly have shot him in the legs and then asked questions. Well done on the homeowner.

4. There may be some complex relation to Obamacare/ACA. No employees necessary (because health care is expensive) to make the kind of meal (giant hamburgers) that make health care necessary. The burger-bot.

Sunday, December 09, 2012

The newly designed monogram of the University of California, while attempting to be modern, loses the prestige and elegance of the current seal.

Have a gander;

Let's give this kerfuffle the KPC breakdown:

(1) there is nothing elegant about the original seal. A star, a book, and a plagiarized quote that makes no sense in this context.

(2) The second seal (sounds like we're discussing a Bergman movie) isn't "attempting" to be modern. It is modern and pretty cool at that.

(3) Most importantly, the seal doesn't give prestige to the institution, the quality of the institution gives prestige (or recognition) to the seal! Harvard isn't Harvard because of the prestige of their seal. It's the other way around.

Abstract:
It is well known that violent video games increase aggression, and that
stress increases aggression. Many violent video games can be stressful
because enemies are trying to kill players. The present study
investigates whether violent games increase aggression by inducing
stress in players. Stress was measured using cardiac coherence, defined
as the synchronization of the rhythm of breathing to the rhythm of the
heart. We predicted that cardiac coherence would mediate the link
between exposure to violent video games and subsequent aggression.
Specifically, we predicted that playing a violent video game would
decrease cardiac coherence, and that cardiac coherence, in turn, would
correlate negatively with aggression. Participants (N = 77) played a
violent or nonviolent video game for 20 min. Cardiac coherence was
measured before and during game play. After game play, participants had
the opportunity to blast a confederate with loud noise through
headphones during a reaction time task. The intensity and duration of
noise blasts given to the confederate was used to measure aggression. As
expected, violent video game players had lower cardiac coherence levels
and higher aggression levels than did nonviolent game players. Cardiac
coherence, in turn, was negatively related to aggression. This research
offers another possible reason why violent games can increase aggression
— by inducing stress. Cardiac coherence can be a useful tool to measure
stress induced by violent video games. Cardiac coherence has several
desirable methodological features as well: it is noninvasive, stable
against environmental disturbances, relatively inexpensive, not subject
to demand characteristics, and easy to use.

Abstract:
It is well established that violent video games increase aggression.
There is stronger evidence of short-term violent video game effects than
of long-term effects. The present experiment tests the cumulative
long-term effects of violent video games on hostile expectations and
aggressive behavior over three consecutive days. Participants (N = 70)
played violent or nonviolent video games 20 minutes a day for three
consecutive days. After gameplay, participants could blast a confederate
with loud unpleasant noise through headphones (the aggression measure).
As a potential causal mechanism, we measured hostile expectations.
Participants read ambiguous story stems about potential interpersonal
conflicts, and listed what they thought the main characters would do or
say, think, and feel as the story continued. As expected, aggressive
behavior and hostile expectations increased over days for violent game
players, but not for nonviolent video game players, and the increase in
aggressive behavior was partially due to hostile expectations.